Power ministry wants no more wait for coal regulator

Govt already preparing Bill to institutionalise a sector monitor to decide prices, standards not fast enough, suggests Shinde to Jaiswal

Shine Jacob / Kolkata Apr 16, 2012,
Business Standard
Amid the controversy over Coal India Ltd’s (CIL) signing of fuel supply agreements (FSAs) with power companies, the Union power ministry has demanded quick action on a regulator for the coal sector, to decide on allotment and pricing issues, including whether to go ahead with the gross calorific value (GCV) pricing system or not.

Late last month, power minister Sushilkumar Shinde had written a letter to his counterpart, Sriprakash Jaiswal, in the coal ministry in this regard.

“We have already written a letter urging the coal ministry that a regulator is the need of the hour in the coal sector and it should be in place immediately. The regulator should decide on allotment of coal and pricing. There are a lot of questions regarding whether Coal India should continue under the GCV system or should go back to the earlier Useful Heat Value (UHV) system,” said K C Venugopal, minister of state for power.
The Centre recently hastened work on an Independent Coal Regulatory Authority Bill 2012, through which a regulator would be in place to decide the prices and to suspend or cancel authorisations of producers. The authority would also specify standard of operations.

Shinde had also reportedly suggested that the Central Electricity Regulatory Commission (CERC) could also be allowed to fulfill the functions of a regulator. Both ministries were at loggerheads on issues related to the signing of FSAs.

Till January, CIL was following the UHV system, dividing coal into seven grades from A-G. After protests at the change to GCV-based pricing, the recent increase in prices was rolled back but CIL continues the GCV system. This has 17 slabs divided on the basis of a bandwidth of 300 kilo calories (kcal) per kg, starting from 2,200 kcal.

Sources in CIL said there would be no rollback on the GCV. “On April 16, we will be having a board meeting to decide on FSAs. We will continue with the GCV system,” said a senior board member of the Kolkata-based company.

CIL is to sign FSAs with at least 50 power companies after the board meeting on Monday and Tuesday. It was forced into this after a Presidential directive early this month.